Forex Daily Review: Spain Regional Elections and GBP/AUD

22 Oct 2012• Matti Williamson, FX and commodities analyst      Spain Regional Elections in Galicia and the Basque

Elections in Galicia (Spain) showed great support for the ruling People’s Party (PP), which supported the gains in Euro-dollar through the Asian session. In the Basque however, PP failed in garnering votes. The Basque Nationalist Party (PNV) and the EH Bildu dominated the votes, increasing the risk for a referendum on independence. Focus will be on 28 October where regional elections are expected to take place in Catalonia, Spain. In some way Spanish PM, Rajoy may be reluctant to ask the EU for a bailout that will be intertwined with new austerity measures, a move that will make his party less favourite in the eyes of the Kingdom of Spain.

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Forex Daily Review: EUR/USD $1 Billion Option Strike

spontaneous’ spike holds a great secret within its Japanese candlestick. $1.0 billion dollar option strike was placed a 1.3050 for yesterday’s New York (NY) cut at 14:00 GMT. The holder of the the option was said to be a large US investment house that was blamed for the tight range in Euro-dollar until the NY cut. EUR/USD spiked

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Forex Daily Review: Another Day, Another Bear

24 Oct 2012• Matti Williamson, FX and commodities analyst      Australian CPI and China Manufacturing Data

Yesterday’s session was enriched with the fine touch of the bear. Moody’s downgrades and reports that Spain’s gap between spending and taxes could be as high as 7.3% of GDP. Weak US earnings assisted the bears’ pressure on EUR/USD, shoving the pair from 1.3074 to 1.2951. Strong CPI data from Australia and a slight improvement from China’s manufacturing sector helped AUD/USD to regain its lost territory on the intrday charts but for some odd reason I am not favouring further gains in the Australian dollar. The CPI came well-above expectations, which in a way chips the probability of an additional rate cut by the RBA in November, but do note below 50.0 reading in the manufacturing PMI means that the sector is continuing to contract but a slower pace. That should leave AUD vulnerable to the European crisis, in this case Greece.

Greece Fiscal Measures Disagreements

Greek leaders continue to disagree on structural reforms, delaying the talks with the Troika. There appears to be disagreements amongst the Greek coalition leaders on the

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Forex Daily Review: EUR/JPY Bearish Gift

25 Oct 2012• Matti Williamson, FX and commodities analyst     

EUR/USD bulls' won the battle of 1.3000, soaking the heavy offers as the pair currently trades at 1.3005. The Japanese yen was heavily sold into Europe on reports that the BOJ will expand its asset purchase facility by

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Forex Daily Review: Will Fitch Take Action and Downgrade the US?

EUR/JPY bearish gift could have been great for Christmas. The pair reversed its hard-gained in accordance to my technical analysis as risk-aversion dominates once again the financial markets. US earnings report failed to trigger a buying-spree in the US indices, resulting in hefty losses to SP500. Once of the main catalysts for the strong weakness are market speculations that Fitch credit rating agency were to downgrade the US sovereign rating, which their spokesman declined to comment.

S&P Downgrades

Risk-aversion is likely to dominate the market once again in today's session as S&P rating agency downgraded BNP Paribas to A

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Forex Daily Review: Hurricane Sandy and EUR/USD

29 Oct 2012• Matti Williamson, FX and commodities analyst      The Euronext's New York Stock Exchange

Forex traders woke up to the news that hurricane Sandy forced the closure of the US stock market for Monday and possibly Tuesday according to recent reports. The hurricane could harm the employees' safety and the major exchanges. The NYSE Euronext's New York Stock Exchange and the Nasdaq announced that the US stock market will be closed for today's session although there is still the option of activating al lelectronic trading for the US markets. Wall street is expected to open but with limited manpower.

Hurricane Sandy Effects on FX Markets

Hurricane Sandy effects may concern investors as extensive damage will not assist the local economies to battle with the current global crisis.

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Forex Daily Review: BOJ Disappoints but Greece is the Big Bear

30 Oct 2012• Matti Williamson, FX and commodities analyst      BOJ Expands Easing Measures

The most-expected announcement from the BOJ disappointed the forex traders as the central bank expanded its asset purchasing program from

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Forex Daily Review: End of Month FX Flows, USD or CHF?

31 October, 2012, the last day of the month is often reflected in the Forex market during the fixing hours. End of month FX flows may show great demand for the US dollar against the major currencies due to:

Recent natural disasters
Upcoming US elections
Greece difficulties in achieving its fiscal goals
Potential US fiscal cliff

Uncertainty in global markets forces traders to seek demand in safe-haven currencies. To affirm USD demand for today’s session it is important to note Greece drafted its budget for 2013 that includes new measures of

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Forex Daily Review: Naked CDS Ban’s Effect on the Forex Market

01 Nov 2012• Matti Williamson, FX and commodities analyst      EUR/USD and the Naked CDS Ban

Hefty demand was seen for the US dollar in yesterday's session through the fixing hours as expressed in yesterday's market review. EUR/USD erased its hard-earned gains and plummeted from 1.3019 to 1.2927 at the time of this writing. End of month FX flows tend to have a significant impact on the Forex market and they are closely monitored by Forex traders. Another reason for the early selling pressure in EUR/USD was reports that Spain is to extend its short-selling ban by three months, taking the air out of the old bulls.

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Forex Daily Review: Will the US Earnings Surprise Again? AUD/JPY Holds the Answers

16 Oct 2012• Matti Williamson, FX and commodities analyst      Today's US Earnings

Strong US earnings boosted the risk sentiment in the Forex market. EUR/USD posted strong gains through Asia, attempting to break above 1.3000 at the time of this writing. Traders will focus on today's US earnings for Goldman Sachs Group, State Street Corp, Coca-Cola Co, Intel Corp, Johnson & Johnson and IBM to see whether the risk sentiment can continue for another day ahead of the key EU summit in Brussels.

EU Summit and AUD/JPY

In my opinion the recent gains are unlikely to sustain themselves throughout the week as there are many reports no major decisions will be taken at this week EU summit. There is an emergency meeting on Greece at the end of October which may have a major effect on the financial markets. Cold water will be poured on the markets' bulls, forcing them to pull their share out of EUR/USD. At the time of this writing the gains do appear to be overstretched, particularly in AUD/JPY:

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Forex Daily Review: EUR/USD Gains on Precautionary Conditioned Credit Line (PCCL)

17 Oct 2012• Matti Williamson, FX and commodities analyst      Moody's Credits the ECB

Moody's Investors Services affirmed Spain's Baa3 credit rating with a negative outlook. Moody's confirmed Spanish sovereign losing capital market access has been materially reduced as the European Central Bank (ECB) was willing to purchase Spanish bonds to limit price volatility.

EUR/USD stretched its gains above 1.3100 as the market was expecting Moody's to downgrade the Kingdom of Spain's sovereign rating. Speculations that Spain is to request a bailout via Precautionary Conditioned Credit Line (PCCL) fuelled the rally to 1.3117 but it does appear the bulls' are losing momentum ahead of the key daily resistance at 1.3140. If the daily resistance holds we may witness the formation of a double-top reversal pattern.

EUR/USD Technical Analysis

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Forex Daily Review: EU Summit Possible Effects on EUR/USD

18 Oct 2012• Matti Williamson, FX and commodities analyst      S&P Downgrades Ahead of the Summit

Today's EU Summit is expected to draw the market attention in hopes that Spain may finally request financial aid to deal with its growing debts and perhaps Torika will surprise and announce Greece's problems are being resolved at a steady pace. Let's first recap what the market has to digest aside the EU Summit in Brussels.

S&P credit rating agency downgraded Madrid and Barcelona after country downgrade. Cyprus also took a hit from the US rating agency, reasoning the country's creditworthiness has deteriorated significantly. Cyprus' credit rating was downgraded from BB to B:

"We consider that deterioration in the banking sector's domestic loan book has increased uncertainties about the final cost of Cyprus' banking crisis, and the implications of this for the government debt burden. We are therefore lowering our long-term sovereign credit rating on the Republic of Cyprus to B from BB."

Greece and China GDP

It is also important to highlight that the Greek Finance Minister said the market should not keep its hopes high on today's EU Summit as an emergency meeting is due at the end of the month about Greece. China GDP came in as expected, which does not contribute to the positive sentiment in global markets as the GDP did contract from 7.6% to 7.4%.

There are really no major headlines that can assist the current uptrend in EUR/USD. Comments from EU leaders can generate bullish spikes in Euro-dollar but I would expect it to be short-lived as profit-taking is likely to materialize once the market is disappointed.
EU Summit Full Schedule

Below is the full timetable for the EU Summit for 18/10/12 - 19/10/12:

EU Summit Schedule for Thursday:

14:15-14:45GMT Arrival of members of the European Council at the Justus Lipsius building
15:00-15:30GMT Exchange of views with the President of the European Parliament Tour-de-table before the meeting
15:45-1800GMT First working session
18:00-2000GMT Working dinner
End of meeting Van Rompuy & Barroso press conference

EU Summit Schedule for Friday

07:15-07:45GMT European Council members arrive Justus Lipsius building
08:00-11:00GMT Second working session
End of meeting Van Rompuy & Barroso press conference
Followed by Working lunch of Heads of State or Government of Eurozone
End of meeting Van Rompuy & Barroso press conference

 

Spain Bond Auction

Forex traders will focus on the upcoming debt auction from Spain. Off-the-run 3-year 4.00% 2016 Bono, 4.25% 2016 Bono and 10-year benchmark 5.85% 2022 Obligaciones will be issued for between

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Forex Daily Review: PLdot may Affirm the Downtrend in Euro-dollar

19 Oct 2012• Matti Williamson, FX and commodities analyst      EU Summit, Day II

Traders that hoped for a deeper solution for Greece may have to wait until 28 October summit that is viewed as the most important meeting this month. Yesterday's EU summit concluded a supervisor for Euro-zone banks is required and should be implemented in the upcoming year (2013). The discussions are expected to continue into today's session but no major headlines are expected.

EUR/USD Analysis

In my opinion we are likely to hear more euro-negative comments in today's meeting in regards to Spain and Greece, which may weigh on EUR/USD. Google earnings and Greek Prime Minister request to release the full tranche (EUR 31.5 billion) as soon as possible weighed on Euro-dollar through the Asian session but the pair managed to cling on to its tight range.

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Forex Daily Review: China RRR Cut Speculations are Officially Denied

12 Oct 2012• Matti Williamson, FX and commodities analyst      China RRR cut Speculation Denial

Vicious speculations flooded the market in the European session China will cut its interest rate (RRR) at 04:15. EUR/USD violated some hefty stops as it topped 1.2984 but the bullish momentum may soon fade as forex traders are considering to dismiss the speculation of an imminent rate cut. The news provider (Dow Jones wire) that said to have reported the forthcoming RRR cut by the People's Bank of China (PBOC) are denying the news at the time of this writing, what a day!!

EUR/USD Intraday Analysis

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Forex Daily Review: EUR/USD Intraday Bearish Correction

15 Oct 2012• Matti Williamson, FX and commodities analyst      Spain Bailout Request, Not Before October 21st

Forex traders dismissed the strong trade balance data from China over the weekend and sold EUR/USD through the Asian session as Spain disappointed the market by refusing to ask for a financial bailout. It is possible that Spain will wait for October 21st regional elections before requesting financial aid from the EU. Market talk suggests Angela Merkel wishes to include Spanish bailout funds with Greece's next tranche at the same time in a 'huge' financial package. Focus this week will be on the US earnings report where 80 companies traded in S&P500 are expected to publish their reports. Citigorup and Charles Schwap Corp will kick-start the US earnings for S&P500 companies in today's session.

Euro-spiked higher at the time of this writing on EU Rehn comments.

According to the news, EU Rehn confirmed that more time for Greece is being considered. It is important to highlight the market speculations from last Friday which indicated that Greece may receive a 2-year extension to meet its fiscal goals, which may be officially confirmed in this week's EU economic summit.

EUR/USD Technical Trading Strategy

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Forex Daily Review: BOJ Warns, CAD/JPY Prepares to Gain

05 Oct 2012• Matti Williamson, FX and commodities analyst      BOJ Monetary Policy

The Bank of Japan (BOJ) concluded its 2-day meeting and kept its asset purchasing program unchanged. The market was slightly disappointed and bought then the Japanese yen (JPY) in response to the muted action. However, forex traders are missing a very important detail about Japan's rate announcement. Economy minister Seiji Maehara attended the central bank's policy meeting. He is the first minister to attend the BOJ meetings in nine years. Mr. Maehara is known for criticizing the bank's actions, stating BOJ is not doing enough to ensure the 1.0% inflation goal is met and suggested the bank should buy foreign bonds as part of its easing measures.

The Japanese law must be revised to allow BOJ foreign bond purchasing by Japan, which will in effect weaken the Japanese yen against a basket of currencies, particularly EUR/JPY and USD/JPY. The BOJ will meet again on 30 October and I believe further easing measures will be taken by then. I would expect USD/JPY to sustain its bullish momentum for the medium term as presented in trading opportunities for 2012.

CAD/JPY Technical Analysis, Strategy for Non-Farm Payrolls

For today's session the main focus is the US Non-Farm Payrolls (NFP), October 2012. Many analysts predict the NFP will continue to improve but argue by how much.

The main FX pair to focus would be CAD/JPY:

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Forex Daily Review: What is the Bearish Target for GBP/AUD Correction?

08 Oct 2012• Matti Williamson, FX and commodities analyst      Non-Farm Payrolls Strategy

My technical analysis for CAD/JPY for the Non-Farm Payrolls (NFP) triggered its bullish target as the previous figure was revised higher, smothering the market with positive sentiment that weakened the Japanese yen (JPY) and US dollar (USD) against a basket of currencies. National holidays in Japan, US and Canada are likely to ensure trading volume will be extremely thin, which could inject a hefty amount of volatility as the Eurogroup meeting is expected to take place in Brussels.

GBP/AUD Technical Analysis

I am giving additional focus to GBP/AUD daily chart as there is a great risk for a corrective weakness to the strong gains made on Friday's session:

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Forex Daily Review: GBP/AUD Skimmed the Target, EUR/USD is Observed

09 Oct 2012• Matti Williamson, FX and commodities analyst      EUR/CHF 'Mysterious' Gain

What may have left certain traders puzzled is EUR/CHF unexpected bullish spike, perhaps thought to be a minor FX intervention by the Swiss National Bank (SNB):

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Forex Daily Review: EUR/USD Bullish Correction, When Will it Begin?

EUR/USD was gunned down by the bears as Bloomberg mistakenly posted the wrong yields for Spain 10-year benchmark, causing heavy selling in EUR/USD. The weakness continued into the US session despite Bloomberg notifying all its clients of the error. Euro-dollar neared its support at 1.2830, implying a bullish correction may be seen in today's session as mentioned in yesterday's market review (GBP/AUD analysis acquired its bearish target).

The economic calendar is relatively light for today's session but the center of attention will be the Spanish Prime Minister, Rajoy's meeting with French President Hollande in Paris. The G7 meeting tomorrow in Tokyo should also support the risk sentiment in global markets aside the strong US earnings data released in yesterday's session. Alcoa Q3 sales were $5.83 billion versus $5.54 billion (market expectations). Yum! also topped expectations and posted strong Q3 results, which favors a scenario where the market bulls sweep the markets through the European and US session.

The Deutsche Finanzagentur

European traders will focus on the German auction where the Deutsche Finanzagentur is expected to re-open its 5-year benchmark, 0.50% October 2017 for up to

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Forex Daily Review: Back to Commodities, Soybean is Observed for Gains

01 Oct 2012• Matti Williamson, FX and commodities analyst      Spain Stress Test Results

Friday's session affirmed what I have suspected. Strong weakness in AUD/USD gunned the bulls' stops as the pair continued to head lower with EUR/USD with end of month FX flows assisting the declines. Speculations flooded the market that Spain stress test results will be far higher than the expected

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